Citizens Advice highlights changes which may affect your household budget this financial year

April 20, 2017

Posted by: Rosalie Boyles

April marks the start of the new financial year, and new rates for wages, benefits and tax come into force along with changes to pensions and savings.

In the last 12 months we helped 1,084 people with money queries, ranging from guidance on pensions and pay, to budgeting and shopping around for the best deal.

Keeping on top of changes that can affect your finances is one of the key ingredients to managing your money today and planning for tomorrow. It’s important to get to know which new rules will apply to you, and the difference they could make to your budget.

Weighing up different changes can be complicated and if you’re not sure whether you’re affected or how, Citizens Advice can help. We can also help you build your money skills, from making use of technology to track your finances to working out how different deals compare.

What you need to know

Income

The National Living Wage for people over 25 will rise from £7.20 to £7.50 on 1 April. There are also increases to the national Minimum Wage for younger workers. You can find out your minimum wage rate here.

From 1 April, 18-21 year olds who start a new claim for Universal Credit will not be automatically entitled to the housing element of the benefit. There are a number of exemptions, such as parents of children.

From 2 April 2017, the standard rates of statutory maternity pay, statutory paternity pay, statutory adoption pay and statutory shared parental pay will rise from £139.58 to £140.98 per week (or 90 per cent of the person’s average weekly earnings if lower).

From 3 April, new claimants for ESA aged 25 or over who the government assesses as capable of working at some point in the future will receive £73.10 a week – £29.05 less than previously. This does not affect people who have already been assessed for ESA. New claimants under 25 will receive £57.90 throughout their claim.

From 6 April 2017, child tax credits will be restricted to two children. If you already have two or more children, you won’t be affected – the limit only applies to children born after April 6. There are also a number of exemptions, for example for twins.

Taxes

From 6 April, the personal allowance will rise from £11,000 to £11,500. This means you’ll only pay tax on earnings over £11,500.

The higher rate tax threshold will also rise from £43,000 to £45,000. This means that you’ll only pay higher rate tax (40%) on earnings above £45,000.

Pensions and savings

From 6 April, people can access up a total £1500 from defined contribution pensions in order to pay for financial advice, at a rate of £500 a year. Don’t forget you can also access free, impartial pensions guidance, from Pension Wise if you’re aged 50 or over.

The state pension will rise by 2.5% on 6 April 2017. For people who reached retirement after April 2016, this will rise to £159.55 a week and £122.30 for anyone who retired before April 2016.

From 6 April, the amount you can save in an ISA will rise from £15,240 to £20,000 a year, meaning that you can save more money without paying any tax on the interest you earn.